With the $582 million purchase of Quip,  Salesforce is dipping its toes into the world of productivity suites. It's a market that's a tad out of Salesforce's normal wheelhouse, but it's all part of an escalating arms race against Microsoft.

Four-year-old Quip was a relatively unknown San Francisco startup until recently, but the company has quietly emerged as one of the innovators in the word-processing space. The company has done this by putting a premium on its communication tools, letting teams easily collaborate within the documents they work on.

Quip is lead by CEO Bret Taylor, who is best known for his time at Facebook as chief technology officer and before that as one of the co-creators of Google Maps. Under the 35-year-old's leadership, Quip has grown to a 40-plus-person team with millions of users. Quip counts Facebook among its growing number of paying customers.

"The age of Office being the only standard is over," Taylor told Inc. in July. "The word processor as we knew it is not as relevant as it once was, but what's next? I think it's Quip."

Taylor came up with the idea for Quip while working at Facebook. There, he saw the impact smartphones were having on consumer software, and he correctly predicted that mobile would have a similar effect on the enterprise market. With co-founder Kevin Gibbs, Taylor set out to build Quip. 

At Salesforce, Taylor will report directly to Salesforce CEO Marc Benioff. Quip is expected to scale faster as part of Salesforce and better compete in the productivity space against both Google and Microsoft. And that's exactly what Benioff would like.

"Quip makes sense as an addition to the Salesforce product suite, filling in the office productivity tools niche, which Salesforce did not already have covered in a meaningful way," said Susan Kimberlin, a tech investor and former Salesforce director of product management.

Though partners at times, Salesforce and Microsoft's relationship has grown tense in recent times as the two begin to align as direct competitors. Just one year ago, Microsoft tried to purchase Salesforce for $55 billion only to be turned down by the San Francisco company, which was looking for at least another $15 billion.

Perhaps now that @Benioff has bought @quip he could also buy an email program that works better than this Outlook thing???

-- Montel Williams (@Montel_Williams) August 1, 2016

 

If anything, Salesforce saved Microsoft much more than $15 billion. On its own, Microsoft has emerged as Salesforce's biggest threat in the customer relationship management market, and that threat only grew larger after Microsoft paid $26.2 billion for LinkedIn.

Not only was Benioff publicly upset about that acquisition--he said he  would've paid more for the social network--but many are also predicting that Microsoft plans to use LinkedIn social networking prowess to better compete against Salesforce.

Microsoft CEO Satya Nadella has encroached on Salesforce's turf, and with the purchase of Quip, it's clear Benioff hopes to take a slice out of the Microsoft Office pie.

Welcome @quip @btaylor @kevgibbs to @Salesforce!We've always loved you & your amazing products.The new productivity. https://t.co/xryFwsgrre

-- Marc Benioff (@Benioff) August 1, 2016

 

"Microsoft buying LinkedIn was a surprise to a lot of people, and I think it scared a lot of people in that space," said Ilan Nass, founder of Taktical, a tech consulting firm.  Salesforce "got scared, and now they're trying to broaden themselves."

For both Salesforce and Taylor, summer 2016 has been a busy period. In June, the San Francisco tech giant made a $2.8 billion purchase for Demandware, another cloud-based company that focuses on providing e-commerce services. Taylor, meanwhile, was added to Twitter's board of director, where he is hoping to offer his social network expertise from his days at Facebook and Friendfeed.

In one of his few comments on the deal, Benioff called Taylor one of the "rising stars of our industry," according to  Business Insider.

"It's been my dream to work more closely with Bret Taylor," Benioff said.

Published on: Aug 2, 2016